IndiGo to gain as fares spike further post Boeing 737 Max grounding

It is advantage IndiGo as grounding of Boeing 737 Max aircraft in India may lead to increase in fares, which have already climbed north this season,  with some routes witnessing a 60 percent jump.

While ticket prices in Mumbai-Delhi route have already seen a hike of up to 50 percent, rates have nearly doubled for Delhi-Chennai flights.

This will spike further, say industry players, as industry regulator DGCA on March 12 announced that all Boeing 737 Max aircraft will be grounded in India, following the Ethiopian Airlines crash on March 10.

The Boeing aircraft was involved in the crash, a near-repeat of the Lion Air crash in October last year.

While Jet Airways' five 737 Max planes were already grounded, owing to its financial troubles, 13 aircraft of SpiceJet will now get added to the list.

Industry officials says that over 50 daily flights could get cancelled because of the fresh grounding.

IndiGo, which doesn't have the aircraft, stands to gain the most. It already has the biggest fleet in the industry, and the most extensive network too. Even as its peers ground airlines, IndiGo can deploy more of its fleet on crucial routes, especially those linking the metros.

Low fares, owing to intense competition, was one of the main reasons that the airline had reported its first quarterly loss since its listing, in the second quarter of the current financial year.

"The shortage of planes and high seat occupancies are expected to push airfares north in the short term. The airfares were at least 15 percent higher this year compared to last year, and owing to the current situation, airfares are expected to rise further this season," said Sharat Dhall, COO (B2C), Yatra.com.

Industry factorsThe fares have risen due to slew of factors, including airport showdowns and grounding of aircraft.

Mumbai airport has been partially shut for three days a week, and will continue with it till the end of March.

Jet Airways, which is waiting for the banks-enabled resolution plan to take effect, has grounded over 50 from its 123-aircraft fleet. IndiGo too was forced to cancel flights due to shortage of pilots.

The cancellations will mount further.

"SpiceJet has presently announced cancellation of 14 flights for today and will be operating additional flights from tomorrow," the airline said.

"Of the 76 planes in our fleet, 64 aircraft are in operations and we are confident of minimising the inconvenience to our passengers and attain normalcy in our operations. While a majority of passengers affected as a result of these cancellations have been accommodated by SpiceJet on alternate flights, rest have been offered a full-refund," it added.

Apart from these cancellations, the upcoming summer vacation is another reason for the fares to increase.

According to the Moneycontrol Flight Price Tracker, the long weekend from March 21, owing to Holi, has further fuelled ticket rates.

"Fares on routes to and from Mumbai and Delhi have witnessed a considerable increase as we move closer to Holi. The airlines have come up with their sales to absorb the spike in passenger load factor as travellers plan their trip back home or take up long weekend trips to neighbouring cities," Dhall had said.